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(Alliance News) - DS Smith PLC on Tuesday accepted an takeover approach from International Paper Co as the tussle for the FTSE 100 listed firm took another turn.
The all-paper offer will see DS Smith shareholders receive 0.1285 International Paper shares for every one held in DS Smith.
The bid values DS Smith, the London-based paper and packaging company at around GBP5.8 billion on a fully diluted basis, and its enterprise value at around GBP7.8 billion.
Shares in DS Smith fell 2.4% to 399.60 pence in London on Tuesday morning.
Shares in International Paper had closed 1.0% lower at USD36.76 in New York on Monday.
On completion, DS Smith will own around 34% of the enlarged entity and International Paper around 66%.
International Paper, the Tennessee-based pulp and paper supplier, and DS Smith said there is a "compelling strategic and financial rationale" for the combination.
DS Smith Chair Geoff Drabble said: "The Board believes the combination with International Paper represents attractive value and creates a strong investment proposition for DS Smith shareholders in the global sustainable packaging industry."
The move by International Paper came after DS Smith agreed merger terms with Mondi PLC, which valued DS Smith shares at 373 pence each.
Shares in Mondi rose 0.5% to 1,411.00 pence in London on Tuesday, while in Johannesburg, shares were also up 0.5%, to ZAR335.83 each.
Mondi has so far made no comment on its intentions towards DS Smith in the wake of the agreed bid from International Paper.
By Jeremy Cutler, Alliance News reporter
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